The banking, insurance, mutual funds, brokerages are all here to help the client make money, correct?

No. Most of them are here to make money for their shareholders. That of course is their main purpose – like most companies. Ditto for the pharma and medical industries too.

In the BFSI space there has been no (repeat NO) innovation at all over the last 20 odd years. I mean no new products which is meant to simplify the life of an individual. Surely the individual too has not sought new products.

Life Insurance for example – No company wants to sell a pure risk cover insurance. They make more money mis managing money than even the clients understand.

Unit linked plans: Sure they have a role in YOUR life. Once upon a time (2004) you could reduce the costs of the policy by topping it up – as much as you want. However since the big Indian life insurance company did not have a Term + rider combination, the LAW was changed.

Classic Endowment Plan: a plan hated by the BFSI space advisers, but sold very aggressively. It pays a high commission, and has almost no role in any portfolio. However it can be used for laddering in a well thought out financial plan – with a well negotiated commission. What hurts is the IRR – it can be rectified by dramatically creating a pass back of commission.

Hybrid Mutual funds: For a person who is not too willing to take a pure equity risk this is not a bad option. However not all advisers are willing to sell this – simply because there is very little reason to exit or enter this fund :-).

Arbitrage funds: An arbitrage fund takes minimal risk and does both legs of transaction almost simultaneously. It actually functions like a debt fund, because money lending across maturities is what it does. Not very popular. You could use this to improve the savings bank return from 3% to 9% 🙂 You should invest with at least a 100 day horizon. Anything less could be dangerous…but obviously gives better returns especially in a volatile market.

Liquid funds, short term debt funds, etc. are also not very popular despite a lot of push by the corporate and bank agents. Personally I do not think we have greatly consistent fund managers or funds in the debt side, and that is sad.